TC 971 & Action Codes (AC)

THE BIGGEST TRAP IN TXMOD

Never look at TC 971 by itself and assume you know what happened!

TC 971 does not simply mean "money moved."
TC 971 is a pointer / reference marker. You MUST ask:
👉 "What is the Action Code (AC)?"

---

Why TC 971 Exists

According to IRM 21.5.1 (General Adjustments), TC 971 is used to:

1. Cross-reference other TINs or tax periods.
2. Record notices, letters, or CP notices generated to the taxpayer.
3. Track identity theft indicators or identity verification requests.
4. Document audit/examination transfers or correspondence.

TC 971
   │
   └───> Look at Action Code (AC)
            │
            ├───> Transaction Date
            │
            └───> Related Document / Notice Number

---

Frequent Action Codes You Will Encounter

Action Code (AC)	Common Meaning / Purpose	What to Look For
AC 065	Notice or Letter issued to taxpayer	Cross-reference notice type (e.g., CP05, 5071C letter).
AC 134	Direct Deposit Information / Reject	Bank rejected direct deposit; switched to paper check.
AC 501 / 506	Identity Theft indicator	Taxpayer submitted Form 14039 or identity theft filter flagged return.
AC 524	Identity Verification letter sent	Letter 5071C, 5747C, or 4883C sent requiring taxpayer to verify ID.
AC 658	Injured Spouse Allocation filed	Form 8379 received to protect non-obligated spouse's share of refund.
AC 977	Amended return received / tracked	Form 1040-X control record established.

---

Diagnostic Checklist for TC 971

When you see a line with TC 971:

1. [ ] Read the 3-digit Action Code (AC) right next to or beneath TC 971.
2. [ ] Check the date: Was it posted before or after TC 150?
3. [ ] Look for a companion hold: Is there a TC 570 on the module? If so, the TC 971 AC often explains why the hold was placed!
4. [ ] Check document locator numbers or control data: Does it specify which IRS campus or automated system created the entry?